8/04/2010 @ 3:17PM

Bad Times Ahead For Pharmaceutical Innovation

Two items in the news this week spell trouble for the makers of pharmaceuticals and the patients who use them. They involve potentially sweeping changes in the Food and Drug Administration’s regulation of the two major groups of pharmaceuticals: medical devices and drugs.

The FDA announced on Aug. 3 its intention to more stringently regulate medical devices–such as prosthetic joints, infusion pumps and diagnostic tests. A particular focus is an approval pathway called “510(k),” which requires only limited data and offers a streamlined route to marketing approval if the device is “substantially equivalent” to an earlier product. But according to the FDA, “Concerns about the [510(k)] program have centered on whether it allows devices to enter the market without sufficient safety and effectiveness evidence and whether a lack of predictability, consistency and transparency is hindering device development.”

Although admittedly the link between the new product and the earlier device has sometimes been tenuous, about 3,500 devices are approved annually via this mechanism, with extremely few problems. Qualifying for the 510(k) pathway will now become more difficult, and more data will need to be obtained and submitted to regulators as the device negotiates the standard pathway.

These new requirements threaten innovation in the industry, especially at a time when financing is hard to obtain. Unlike the drugs sector, many device makers are small and financially fragile. Anticipating greater regulatory stringency, device companies have begun to move abroad and even to write off the U.S. market for certain products that they consider to be over-regulated.

The second item concerns the regulation of drugs. Citing a supposed recent spike in drug recalls, Sen. Michael Bennet, D-Colo., on Aug. 3 introduced legislation to increase the powers of the FDA and the stringency of drug regulation. “For too long, the FDA has lacked the proper authority to adequately safeguard our drug supply. … Americans need to be able to trust that the drugs in their medicine cabinets are safe, no matter where they’re made.”

Even without Bennet’s proposed increased regulation, current trends at the FDA ensure that fewer new medicines of any kind will find their way to Americans’ drug cabinets. The FDA is notorious for pushing the envelope of its statutory authority in ways that stifle innovation in drug development. Although there exists a legal requirement only to show that a new drug is safe and effective, the agency has invented new criteria, including a demonstration of superiority, which it applies arbitrarily. Proving that a drug is better than existing drugs often is, however, much more difficult and vastly more expensive than just proving that it is safe and effective, because if two medicines’ efficacy differs only marginally, the clinical trials must be very large in order to attain statistical significance. Many drugs useful for some patients will founder if this new criterion is widely implemented, reducing competition in the drug market and boosting prices.

The FDA has also recently reversed a sound policy that required prior legal review of warning letters sent to pharmaceutical companies; this will give rise to far more, and more legally dubious, warning letters sent to companies. And yet another development is an increase in the kinds and amounts of “user fees” that companies must pay just to get the FDA to review their applications. These fees are nothing more than a discriminatory tax that ultimately will be passed along to patients. They are also a shabby attempt to fund government activities “off the books.” Congress should scrap the user fees, face its responsibilities, appropriate whatever funds it thinks are necessary for the FDA, and then permit the public to judge the results.

Sen. Charles E. Grassley, R-Iowa, once chided drug regulators: “The health and safety of the public must be the FDA’s first and only concern.” He is right, but particularly when governmental pre-marketing approval of a product is required, greater health and safety are not synonymous with more stringent regulation. In fact, net benefit to patients often suffers because of an obscure regulatory phenomenon–the asymmetry of outcomes from the two types of mistakes that regulators can make. A regulator can err by permitting something bad to happen (approving a harmful product, a Type I error in risk-analysis parlance) or by preventing something good from becoming available (not approving a beneficial product, a Type II error). Both outcomes are bad for the public, but the consequences for the regulator are very different.

The first kind of error is highly visible and can have dire consequences for regulators, but the second kind of error–keeping a potentially important product out of consumers’ hands–is usually a nonevent and elicits little attention, let alone outrage.

The FDA’s approval process for new drugs has long struggled with this Type I/Type II dichotomy. The mistaken approval of a hazardous product is highly visible; the media pounces, the public denounces, and Congress pronounces. The developers of the product and the regulators who allowed it to be marketed are excoriated and punished in such modern-day pillories as congressional hearings, television news magazines, and newspaper editorials. Because a regulatory official’s career might be damaged irreparably by the good faith but mistaken approval of a high-profile product, decisions are often made defensively–in other words, to avoid Type I errors at any cost.

Former FDA Commissioner Alexander Schmidt aptly summarized the regulator’s conundrum: “In all our FDA history, we are unable to find a single instance where a congressional committee investigated the failure of FDA to approve a new drug. But the times when hearings have been held to criticize our approval of a new drug have been so frequent that we have not been able to count them. The message to FDA staff could not be clearer.”

As a result, regulators introduce highly risk-averse policies and make decisions defensively–avoiding approvals of potentially harmful products at any cost–and tending to delay or reject new products of all sorts, from fat substitutes to vaccines and painkillers. If a regulator does not understand or is vaguely uneasy about a new product or technology, his instinct is to delay or interdict. That’s bad for public health and for consumers’ freedom to choose.

What is the remedy for the FDA miasma? For a start, it needs a new ethic, one that better balances the risks of risk-aversion against those of timely approvals. And for that, there will need to be new, more courageous and intelligent leadership, and more enlightened congressional oversight. I’m not holding my breath.

Henry I. Miller is a physician and fellow at Stanford University’s Hoover Institution. He was the founding director of the FDA’s Office of Biotechnology.